© copyright 2012, lakshmi kumaran & sridharan, attorneys by: g. s hivadass executive partner...

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© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS IMPORT/EXPORT VALUATION AND PROCEDURE By: G. SHIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

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Page 1: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

IMPORT/EXPORT VALUATION AND PROCEDURE

By:

G. SHIVADASSExecutive PartnerLakshmi Kumaran & Sridharan, Attorneys

Page 2: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

2© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

TOPICS COVERED IN THIS PRESENTATION

Valuation under Customs Law

Transaction Value Method

Import Valuation

Export Valuation

Page 3: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

VALUATION UNDER CUSTOM LAW

Page 4: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

4© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

VALUATION UNDER CUSTOM LAW

Sec 2(41) - ‘Value’ – means value determined in accordance with S.14

New S.14 applicable since 2007

Two methods of valuation

Tariff Value Method – Sec 14(2)

Transaction Value Method – Sec 14(1)

Customs Valuation Rules

Customs Valuation (Determination of Value of Imported Goods) Rules, 2007

Customs Valuation (Determination of Value of Export Goods) Rules, 2007

Page 5: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

5© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

TRAIFF VALUE METHOD

Ad valorem duties to be calculated on tariff values fixed by the Board

Tariff values can be fixed for any class of imported or export goods

Notified in the official gazette

Notification No. 36/2001-Cus. (N.T.), dated 3.8.2001

Page 6: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

TRANSACTION VALUE METHOD

Page 7: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

7© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

EVOLUTION

• S. 14 and Customs Valuation Rules based on1. GATT Article VII – Valuation for Customs

Purposes – lays down general principles of valuation (presently, the WTO Valuation Agreement)

2. Agreement on Implementation of Art.VII of GATT- Multilateral agreement for– A fair, uniform and neutral system of

valuation– System consistent with commercial

practices

Page 8: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

8© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

Article 1 of Implementation Agreement

Customs value of imported goods shall be “Transaction Value” provided –

No restrictions as to the disposition of goods by buyer

No consideration for which value cant be determined

The buyer and seller are not related

Page 9: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

9© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

SECTION 14

“ …..the value of the imported goods and export goods shall

be the transaction value of such goods, that is to say,

the price actually paid or payable for the goods when sold

for export to India for delivery at the time and place of

importation, or as the case may be, for export from India

for delivery at the time and place of exportation, where the

buyer and seller of the goods are not related and price is

the sole consideration for the sale subject to such other

conditions as may be specified in the rules made in this

behalf :…”

Page 10: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

10© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

INGREDEINTS OF TRANSACTION VALUE

1• price actually paid or

payable for the goods

2• sold for export to

India/from India

3

• for delivery at the time and place of importation/exportation,

4• where the buyer and

seller of the goods are not related and

5• price is the sole

consideration for the sale

Page 11: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

11© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

CONDITIONS FOR ACCEPTING TRANSACTION VALUE

Section 14 (1)& Rule 3(2)

Buyer and seller should not be related

Price should be the sole consideration for the sale

No restriction on buyer for disposal of goods; which substantially affect the value of goods

Sale should not be subject to conditions of which value cannot be determined

No further consideration to seller of which adjustment cannot be made

Page 12: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

13© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

SOLD FOR EXPORTATION

There must be a sale for export to the country of importation (India)

Sale can be made in high seas to be imported into India

Advisory Opinion 14.1: only transaction involving an actual international transfer of goods

Applicable when goods are cleared from a bonded warehouse to the DTA

Charges after importation should not be included in the customs value.

Page 13: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

14© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

PRICE IS THE SOLE CONSIDARATION

If there is other consideration, it should be added to the transaction value

• Activities on account of buyer for which adjustment is not provided in rule 10 – not to be added to price

• If price is subject to a condition for which value cannot be determined – T.V. is rejected.

Page 14: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

15© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

INCLUSION TO THE ASSESSABLE VALUERULE 10 OF CVR 2007

Rule 10 – cost and services to be included if not already included in the price paid or payable

10(1)(a) - Incurred by the buyer for the imported goods

Commissions and brokerage except buying commissions

Cost of containers being one with the goods

Labour and material cost for packing

Page 15: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

16© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

SUPPLIES BY THE BUYER 10(1) (b)

Goods and services supplied by buyer directly or indirectly

Free of cost or at reduced cost

For use in connection with production and sale for export of imported goods

Materials, components, parts

Tools, moulds, dies

Materials consumed in the production

Engineering, plans, sketches undertaken elsewhere other than in India and necessary for the production of imported goods

Page 16: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

17© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

ROYALTIES AND LICENSE FEES 10 (1) (c)

Royalties and License fee related to the imported goods;

Required to be paid by the buyer directly or indirectly;

As a condition of sale of the goods being valued.

Include payments in respect to IPRs

Doesn’t include payment for the right to reproduce in India

Payments for the right to distribute or resell in India, includible only if a condition of sale

Payments towards process to be undertaken post importation includible if a condition of sale (Explanation) – e.g. fees towards technical know-how for using the product in India

Page 17: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

18© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

OTHER PAYMENTS MADE TO THE SELLER

10(1)(d)

Value of any part of the proceeds of any;

Subsequent resale, disposal or use of imported goods that;

Accrues directly or indirectly to the seller.

E.g. Distributor/agent imports goods and once he sells these goods in India, proceeds are payable to the foreign seller.

10(1)(e)

Payments made or to be made

As a condition of sale of imported goods

By the buyer to the seller or a third party to satisfy an obligation of the seller.

Page 18: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

19© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

FOR DELIVERY AT THE TIME AND PLACE OF IMPORTATION

Rule 10(2) – Value of the goods for delivery at the time and place of importation

Includes

Cost of transport to the place of importation, including ship demurrage charges

Loading and unloading charges associated with the delivery at the place of importation

The cost of insurance

Rules provide for additions as a percentage of FOB value in case the costs are unascertainable

Page 19: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

20© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

OTHER ADDITIONS

Rule 10(4) – no other additions shall be made in determining T.V. except as provided for in Rule 10.

Rule 10(3) – Additions shall be made on the basis of objective and quantifiable data

Page 20: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

21© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

EXCLUSION FROM ASSESSABLE VALUE

Following charges are to be excluded – Interpretative Note to R.3

Erection, testing and commissioning charges – port importation expenses

Cost of transport after importation

Duties and taxes in India

Payments that do not relate to imported goods

Bank charges for bank services

Page 21: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

22© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

REJECTION OF DECLARED VALUE

Rule 11 – importer or his agent has to furnish a declaration – detailed disclosure relating value of imported goods

Proper officer – truth and accuracy of information furnished

Wrong declaration is an offence

Rule 12 – value declared can be rejected-AO has doubts regarding the truth or accuracy

Rule 3(4) – if value cannot be determined under Rule 3 – determined by proceeding sequentially through Rule 4-9

Page 22: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

23© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

TRANSACTION VALUE OF DECLARED GOODS- RULE 4

If Rule 3 value is unacceptable, value of imported good; T.V. of identical goods Sold for export to India Imported at or about the same time as that of

the goods being valued Goods in comparison shouldn’t have been

provisionally assessed Rule 4(3) – More than one T.V. of Identical goods,

lowest of such value should be taken

Page 23: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

24© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

TRANSACTION VALUE OF DECLARED GOODS- RULE 4

Identical goods fulfill the following criteria – Rule 2(1)(d)

Goods should be same in all respects

Should have been produced in the same country

Should be produced by the same manufacturer unless unavailable;

Should have been imported from the same country

Sale should be at the same commercial level

If at different commercial level, due account to adjustment and demonstration of difference

Page 24: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

25© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

TRANSACTION VALUE OF SIMILAR GOODS

If Rule 3 or rule 4 value cannot be accepted; T.V. of similar goods imported at or about the same time

Goods in comparison shouldn’t have been provisionally assessed

Distinction regards identical goods – in case of similar goods, it is enough if they like characteristics and perform same function

Page 25: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

26© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

TRANSACTION VALUE OF SIMILAR GOODS

Similar goods fulfill the following criteria – Rule 2(1)(d)

Goods should be alike in all respects – commercially interchangeable

Should have been produced in the same country

Should be produced by the same manufacturer unless unavailable;

Should have been imported from the same country

Sale should be at the same commercial level

If at different commercial level, due account to adjustment and demonstration of difference

Page 26: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

27© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

RULE 6

If the value can’t be determined under Rules 3, 4 and 5

the value shall be deductive under rule 7,

otherwise, computed value under rule 8.

At the request of the importer + approval of the proper officer, Rule 8 can be used first

Page 27: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

28© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

DEDUCTIVE VALUE- RULE 7

When Rule 3, 4 and 5 not acceptable/available – but products are sold in India

A.V. calculated by reducing post-importation costs and expenses from the selling price

Price only after processing of imported goods- processing costs to be deducted

Price at or about the time goods are being valued If not, date within 90 days of importation

Page 28: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

29© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

COMPUTED VALUE- RULE 8

Computed value shall consist of the sum of:

the cost or value of materials for producing imported goods;

amount for profit and general expenses usually reflected in sales of similar goods;

the cost or value of all other expenses under sub-rule (2) of rule 10

Used in cases of buyer and seller being related and producer supplies necessary costing

Page 29: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

30© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

RESUDIAL METHOD- RULE 9

A best judgment method – where value cannot be determined under preceding rules

Reasonable means consistent with the principles and general provisions of these rules and available data

The value arrived shall not exceed price of like goods sold for import to India

Page 30: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

31© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

PROHIBITIONS IN DETERMINING THE VALUE

Use of selling price in India of goods produced in India

System of accepting highest of the alternatives

Price of goods prevalent in the country of exportation

Price of goods for export to a country other than India

Minimum customs values

Arbitrary or fictitious value

Page 31: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

32© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

RELATED PARTY- RULE2(2)

Officers or directors of each other’s business Legally recognized partners in business Employer-Employee Any person directly or indirectly owning, controlling or

holding 5% or more of the stock or share of both the parties

One of them controls the other or both controlled by a third person or together they control a third person - directly or indirectly

Members of the same family. Subject to their falling within the above criteria- sole

agent or sole concessionaire or sole distributor of the other shall be deemed to be related.

Persons include “legal persons” .

Page 32: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

33© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

VALUATION OF RELATED PARTY TRANSACTIONS RULE 3(3)

Rule 3(3)(a) – Transaction Value to be accepted where relationship do not influence the price.

Rule 3(3)(b) – Importer to demonstrate that declared value closely approximates to one of the following values at or about the same time:

The transaction value of identical goods, or of similar goods, in sales to unrelated buyers in India;

The deductive value for identical goods or similar goods;

The computed value for identical goods or similar goods.

Where T.V. cannot be applied – sequential application of R.4-9

Page 33: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

EXPORT VALUATION

Page 34: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

35© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

VALUATION OF EXPORTS

Based on Transaction Value – S.14 and

Customs Valuation (Determination of Value of Export Goods) Rules, 2007

If conditions of T.V. are not met, valuation as per Rules

Rule 3(2) of Export Valuation Rules – T.V. to be accepted even if buyer and seller are related – but price not influenced

Valuation under the Rules – if T.V. not possible – sequentially through rule 4 – 6

Page 35: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

36© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

VALUATION OF EXPORTS

Export Value by Comparison – Rule 4 T.V. of Goods of like kind and quality – identical

or similar – commercially interchangeable – R.2(1)(a)

Exported at or about the same time To other buyers in the same destination

country If not, another destination country is

considered Computed Value – Rule 5 if R.4 is inapplicable –

on the basis of Cost of production of export goods Charges for deign or brand An amount towards profit

Residual Method – Rule 6 when R.4 & 5 inapplicable Best judgment method similar to import

valuation

Page 36: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

IMPORT PROCEDURE

Page 37: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

38© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

IMPORT PROCEDURE

Person in charge of Conveyance – Import manifesto (IGM) submitted – ‘entry inwards’ granted

Self Assessment based on RMS in respect of specified importers

IEC code number from DGFT prior to filing BoE

Importer – Submission of Bill of Entry with relevant docs – contains description, value, quantity, exemption notification, classification – Sec 46

White Bill of Entry - home consumption - cleared on payment of customs duty

Yellow Bill of Entry – warehousing - ‘into bond Bill of Entry’ as bond is executed – no duty is paid and imported goods are transferred to warehouse

Green Bill of Entry - clearance from warehouse on payment of customs duty - ex-bond clearance.

Page 38: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

39© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

IMPORT PROCEDURE

Bill of Entry is noted - Goods are assessed to duty, examined and pre-audit is carried out - Customs duty is paid after assessment.

Rate of customs duty on the day of noting Self Assessment under Section 17 Payment under protest Provisional assessment – Section 18

On importer’s request if unable to make SA Deemed necessary to carry out tests Necessary to make further enquiry

Final Assessment – difference paid or refund

Page 39: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

40© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

IMPORT PROCEDURE

Out of customs charge for clearance issued

After that, port dues, demurrage and other charges are paid and goods are cleared.

Goods can be disposed of if not cleared from port within 30 days – Sec 48

Page 40: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

41© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

SELF ASSESSMENT PROCEDURE

Introduced during Budget speech 2011-2012

ALL IMPORTERS/EXPORTERS

Already prevalent in Excise & Service Tax

Extended to Customs

Trade Facilitation Measure

Procedure is same for exports & imports

To quicken the clearance of cargo

Page 41: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

42© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

NEED FOR SELF ASSESSMENT

To reconcile 2 conflicting interests (Customs Checks vs. Faster Clearance)

To allow release of the goods on the basis of self-assessment

Without examination of the goods – Green Channel

To enable the importer to have possession of the goods

Also interests of the government are protected by resorting to On-Site Post Clearance Audit (OSPCA)

Underlying Reason

Page 42: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

43© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

CHANGES INTRODUCED IN SELF ASSESSMENTSub-

Section Old Section New Section

(1) PO to assess the goods imported Self Assessment by Importer

(2) Verification to be done by PO PO may verify the self-assessment of such goods

(3) PO may ask for documents for the purpose of assessing duty

PO may ask for documents for the purpose of Verification of Self assessment

(4) prior to the examination or testing PO may permit to be assess duty on the basis of the statements made in the entry and the documents produced

Re-assessment of goods if on verification self assessment found to be wrong

(5) Speaking order if assessment done by PO different from assessment sought by importer/exporter

Speaking order if re-assessment done by PO different from self assessment done by importer/exporter

(6) Not there Audit of self assessment where re-assessment not done

Page 43: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

44© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

FLOW OF SELF ASSESSMENT

An importer / exporter SHALL Self Assess the Duty

PO may VERIFY the SA by examination & Testing PO may require the importer / exporter to produce documents

On verification of SA , if

SA NOT DONE correctly SA is DONE correctly

PO MAY RA the duty

If RA is contrary to SA

If importer/exporter accept RA (writing) If importer/exporter

not accept

No issue of Formal Order Speaking Order to be passed with in 15 days from date of RA

Page 44: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

45© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

IMPACT OF SELF ASSESSMENT

In case of

No SA done SA done + RA is required under

Section 17

Importer / exporter can opt for PA by PO

PA gets converted into FA PA gets converted into RA

Key:

PA – Provisional Assessment; RA - Re-Assessment

SA – Self Assessment

PARA 7 OF THE CIRCULAR 17/2011-CUS

Page 45: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

46© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

PROVISIONAL ASSESSMENT- S.18

Unable to make SA + requests in writing to PO or

PO deems it necessary for the imported goods to be tested or

Importer produced documents + for further enquiry or

Documents not produced/Information not provided + further enquiry

Customs (Provisional Duty Assessment) Regulations, 2011 which supersedes 1963 Regulations

Page 46: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

EXPORT PROCEDURE

Page 47: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

48© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

EXPORT PROCEDURE

Loading in conveyance after ‘Entry Outward’ is sanctioned Person in charge of conveyance submission of ‘Export

Manifest’ Exporter to obtain IEC number from DGFT - registered

with Export Promotion Council if export benefits claimed Export is required to submit Shipping Bill with required

documents for obtaining permission to export. Shipping Bill for export of goods under claim for duty

drawback Shipping Bill for export of dutiable goods - this should

be yellow colour Shipping bill for export of duty free goods - it should be

white colour shipping bill for export of duty free goods ex-bond - i.e.

from bonded store room - it should be pink colour Shipping Bill for export under DEPB scheme - Blue

colour.

Page 48: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

49© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

EXPORT PROCEDURE

FEMA formalities - GR/SDF/Softex form is required to be submitted.

The shipping bill is noted, goods are assessed and examined. Export duty is paid, if applicable.

Customs check for advance licenses, restriction and prohibitions

If export is under export incentives, relevant documents are checked and certified. Then proof of export is obtained on ARE-1

Conveyance can leave only after ‘Let Export’ order is issued.

Page 49: © COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS By: G. S HIVADASS Executive Partner Lakshmi Kumaran & Sridharan, Attorneys

© COPYRIGHT 2012, LAKSHMI KUMARAN & SRIDHARAN, ATTORNEYS

THANK YOU